recent posts

The US dollar traded higher against most
of the major currencies over the past week. No thanks to Yellen's testimony before
Congress. Market participants took away from her a reduced chance of a
mid-year rate hike. We disagree with the
interpretation, seeing her comments as 1) playing down lowflation as transitory and 2) seeing the global inf…

Did the Dollar Find its Groove Again?
Reviewed by Marc Chandler
on
February 28, 2015
Rating: 5

This Cool Video was posted on YouTube by Nahiddanish. In a little more than four minutes it shows two exercises with monkeys. The first shows elements of trust and cooperation. The second appears to show a sense of justice, fairness and/or maybe greed. When watching animal behavior there is always the risk of anthropomorphizing and projecting …

Cool Video: Monkeying Around with Cooperation and Justice
Reviewed by Marc Chandler
on
February 28, 2015
Rating: 5

Numerous companies have reported that developments in the currency markets, especially the dollar's appreciation, has been an important headwind on their earnings. The logic is compelling. US S&P 500 earn almost 50% of their revenue from foreign markets. Given the greenback's appreciation, those foreign earnings translate into less …

The dollar's gains scored yesterday are being consolidated now, giving it a somewhat heavier tone. Equity markets are mixed, consolidating this week's gains. Bond markets are also mostly quiet. There are a couple of exceptions. Sweden reported Q4 GDP of 1.1% quarter-over-quarter, which is twice the consensus expectation. The Q3 growth…

US prices are falling. The 0.7% decline in US consumer prices was the largest monthly drop since December 2008. Consumer prices in January fell 0.1% from a year ago. The last time the year-over-year CPI was negative was when the US economy was just beginning to recover from deep contraction associated with the end of the credit cycle and the fi…

Is the US Really Experiencing Deflation?
Reviewed by Marc Chandler
on
February 26, 2015
Rating: 5

This Great Graphic comes from Eurostat. It shows the minimum wage as of the start of the year for the 28 members of the EU. It ranges from 184 euros a month in Bulgaria to 1923 euros in Luxembourg. This overstate the real gap. When adjusted for purchasing power parity that 10-1 gap is reduced to 4-1 according to Eurostat. Some countries, in…

Great Graphic: Minimum Wages in the EU
Reviewed by Marc Chandler
on
February 26, 2015
Rating: 5

Sterling and the dollar-bloc currencies are firm, but the euro and yen
remain confined to well-worn ranges. The US dollar is vulnerable to poor
economic news in the form of a negative year-over-year CPI print, especially
given that Fed hike expectations have not been rebuilt in response to Yellen's
testimony. We understand her testimony to ha…

It seems every one has reservations about the Greek proposals. However, the European Commission, the Eurogroup of finance ministers and the heads of state, including Merkel, seem somewhat more supportive than the ECB and IMF. National parliaments will likely grant their approval in the coming days. The hardest sell may be in Greece itself. Pri…

Greek Parliament is Key to New Starting Point
Reviewed by Marc Chandler
on
February 25, 2015
Rating: 5

The dovish take to Fed Chair Yellen's testimony yesterday has continued
to weigh on the dollar and support global bond markets. Equities are
mixed with the major markets lower while emerging markets have rallied.
The MSCI Emerging Market equity index is up about 0.8% to reach its highest
level since early last December. Emerging markets and…